Unsafe for Businesses at any Speed

The summer of 2007 saw a range of product recalls from jewelry for children to pine nuts. Most of the products involved had been manufactured in China and imported into the United States. The Consumer Products Safety Commission a relatively unknown government agency was thrust into the spotlight due to perceived regulatory failures. Congress responded to the so-called “Summer of Recalls” with a series of hearings that resulted in the adoption of the Consumer Product Safety Improvement Act.

Among the provisions of the Consumer Product Safety Improvement Act (the “CPSIA”) is a requirement that the Commission develop and implement an online database on which consumers may report unsafe and dangerous products. The database, according to the CPSIA, must be publicly available, searchable and accessible through the Commission’s website. Additionally, the data should be “sortable and accessible” by date, consumer product, model name, manufacturer or private labeler’s name, as well as any other element the Commission has deemed necessary in the public interest.

The resulting database is set to launch on March 11, 2011, barring government shut-down or legislative action to delay or stop implementation. The database is accessible through the Commission’s website and directly at The Commission held hearings and industry meetings to discuss the database, its role and how it would be developed and implemented.

According to the Commission, however, government databases, already in use, where consumers are able to report safety issues had been used as a foundation for its database. Specifically, according to the Commission, the Food and Drug Administration’s MedWatch, a reporting system for drugs, medical devices and other regulated items, and the National Highway Transportation Safety Administration’s, a system for reporting safety issues related to automobiles, had been used as guides.

However there are significant differences between the FDA and NHTSA databases and the one the CPSC has developed. On the CPSC database a consumer must input relatively little information to report a claim that a product has either actually caused harm or has the potential to do so. The consumer must define the product and provide a narrative that describes the actual or perceived danger, as well as providing contact information for the Commission’s use.

On the FDA and NHTSA databases, consumers are required to provide a significant amount of information about the products for which a claim has been filed. On the NHTSA database, a report may not be filed until the consumer has specified not just the manufacturer of the car but the make, model and year as well. The FDA requires that a consumer provide a variety of information including product name and lot number.

Unlike the FDA and NHTSA databases, the consumer is not required to provide information that specifically identifies the products about which the complaints are filed. The product/brand names, serial number, manufacturer and place of purchase are optional on the CPSC database.

Even though the Commission has not required that consumers provide information that specifically identifies a product, the CPSIA requires that the reports be made public within ten (10) days of having been filed. Prior to being published, the Commission must notify a named party (a manufacturer, importer or private labeler) that the report has been filed. Considering the consumer is not required to name a manufacturer, importer or private labeler, the Commission is either going to have to research the claim rather quickly to find one or fail to send the required notice.

Regardless, a manufacturer or other entity has limited options for a response to the complaint. It can provide a response to the complaint directly on the database, request redaction if confidential information is compromised or request removal due to “materially inaccurate” information. As of this writing, the Commission has not yet defined what qualifies as “materially inaccurate,” but has stated that the burden is on the manufacturer or importer of the product to prove that the information is not accurate.

Congress has required that the Commission provide notice to the general public that there is no guarantee of accuracy, completeness or adequacy of the complaints. Specifically, a product being included in the database does not mean it is actually defective or unsafe. However, the Commission’s representatives have made public claims that contradict the objective nature of the database. As recently as last week the chair of the Commission, Inez Tenenbaum, told those gathered (me included) at the International Consumer Product Health and Safety Conference that a mother should be able to search the database to find out if there are issues with a product that could harm her child.

Significantly the risks the database in its current incarnation poses to businesses are great:

•There are no safeguards to prevent individuals, competitors, or even investors who want to impact a stock price, from filing false or misleading reports that could result in negative publicity for a named manufacturer. While a manufacturer can take steps to prove a report is materially inaccurate, it will require time and money to do so and until the claim is established to be materially inaccurate it remains on the database.

• It is unclear what companies are entitled to register to receive notices of complaints. That is, consumers may state where the product in question was purchased but retailers are not allowed to register to receive notification of complaints.

•The claims are not verified, and consumers do not have to provide information that specifically identifies the products or the parties involved.

• There is no accounting for counterfeit goods which will be wrongly attributed to a manufacturer until they can prove the product is counterfeit.

However, the Commission could implement minor changes to the database to limit the negative impact on businesses of the public databases:

• Consumers should be required to identify the name of the product or brand, the manufacturer, where known, and provide a serial number, or other information, to sufficiently identify the product and prevent multiple reports.

• Consumers should have to acknowledge a formal notice that lying to the federal government is a crime punishable by imprisonment and civil fines.

• The Commission should collect IP addresses from complainants and flag repeat addresses to discourage competitors and others from filing multiple reports, whether or not false.

•Before accessing the database, consumers should have to acknowledge by checking a box that the database is provided for information purposes only and that the products included are not necessarily unsafe. A link to the recall database should be provided to note the difference between the databases.

The Commission has put a call out for all manufacturers, importers and private labelers to register with it so that they can provide timely notice if any claims are made involving their products. However, you should consult with a consumer product safety attorney before complying with the request to make sure it is in the best interest of your company to do so. Regardless, companies MUST monitor the database on a daily basis for reports involving their company or products.

A focus of President Barack Obama’s 2011 State of the Union, and of his current legislative strategy, is regulatory reform. He has emphasized that the government needs to consider the impact regulations have on small businesses while not sacrificing its duty to protect Americans. The impetus for the revisions to the Consumer Product Safety Act, including the database, were a number of situations where consumer products had been imported into the United States with unsafe lead levels or other issues. While the Commission has been directed to establish a database for consumers to report alleged unsafe products, the current incarnation of the database will have a profound negative impact on businesses, especially small ones.

About Nancy Prager

Nancy Prager is an attorney based in Washington, D.C. She represents a wide range of clients on matters from intellectual property to estate planning. Before starting her own practice, she practiced with firms in Memphis and Atlanta, as well as providing business development services to technology companies. She launched her practice to offer strategic legal services to clients at an affordable rate. Additionally, Nancy is a sought after speaker and writer on issues related to the convergence of intellectual property, technology and media. Nancy was asked to write a series of commentaries for on the emerging legal issues related to the transmission of content on the internet. She has spoken to organizations and conferences around the country on issues related to the convergence of technology, content and intellectual property, as well as strategic legal issues for companies, individuals and artists. Journalists often rely on Nancy as a resource for emerging legal issues. Nancy has a strong commitment to social justice. She has founded, or co-founded, a number of organizations and programs that provide tangible services to their constituencies. For example, while a student in law school she developed the Domestic Violence Advocacy Center that provides legal services to victims of domestic violence. Additionally, she has been involved with a number of organizations that provide services to children and their families, including serving on the boards of the Harwood Center and Porter Leath Children’s Services. She is a graduate of Wake Forest University School of Law and the University of Wisconsin, Madison. She is a member of the District of Columbia Bar, the State Bar of Georgia and the State Bar of Tennessee. She has been a member of a variety of legal organizations including the Copyright Society of the USA and the American Bar Association.
This entry was posted in Consumer Product Safety Commission, consumer protection, consumer safety, Recalls,, Regulatory Reform, and tagged , , . Bookmark the permalink.

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